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China's high-speed rail network reports staggering losses

Staff Reporter

2013-02-03

13:57 (GMT+8)

An HSR station in Xingtai, Hebei province. (File photo/Xinhua)

China has faced deficits in each of its high-speed railway operations due to high up-front costs and the long wait for a return on investment, Shanghai's First Financial Daily has quoted a Chinese railway analyst as saying.

Eleven new high-speed railways started operations in 2012.

Some high-speed lines reported profits last year. The Beijing-Shanghai line made revenue of 17.38 billion yuan (US$2.2 billion) in 2012, breaking even from last June. The Shanghai-Nanjing intercity line reportedly has started making a profit.

Only lines running in the developed eastern coastal areas stand a chance of making money, said analysts, adding that most railways operating in areas of China's interior are still suffering huge losses. Improving networks in western areas will help these operators boost their revenues in the future, said an analyst.

There have been continual concerns over operational losses since the beginning of the country's high-speed rail construction boom. According to analysts, the Beijing-Tianjin, Shanghai-Nanjing, Beijing-Shanghai and Shanghai-Hangzhou lines are the only lines in the country that stand a chance of breaking even without amortization.

More high-speed rail links will be built in the country's interior regions in the next three years, said a foreign bank's transportation analyst, who said that operators of high-speed railways in the interior will gradually improve their construction quality but will need to wait three times as long to break even as more developed coastal provinces.

Railway companies' profits come mainly from freight business, which account for 70% of total profits. The high-speed railway network mainly focuses on passenger transportation, said analysts.